Catarina's World

Now the permanent stewards of the world economy, will G20 keep the momentum going by improving the global economic regime that has been crafted over the years?

Will G20 leaders from developing countries manage to make their colleagues from the West realize that in order for the world economy to work properly, there need to be advantages for the poor as well?

G20 has come a long way – the new kid on the block in 2004 is now the leader of the pack. It started as an alliance to bring democracy to world trade at the WTO talks in Cancun and has become the main permanent body in the world responsible for economic co-operation, meeting annually at the leaders level

Hopefully G20 will not forget the importance of world trade. Will G20 again, manage to have an impact on world trade? The WTO trade talks in Cancun, as you may remember, collapsed as a result of G20 demanding fairer trade. If so, what strategies will be deployed to negotiate a trade deal that benefits not only multinationals in the North but also the poor in the South? How will G20 make the world focus on making international trade rules fairer? What steps will be taken to decrease rich countries protectionist policies?

G20 is now the key player on the global scene which, at least in theory, enables it to provide the conditions for developing countries to embark on peace, prosperity and pluralism. We have come a long way from G8 to G20 and it will go further. The developing world, representing four-fifth of humanity, is now much better represented on the global scene.

Poverty does not cause terrorism – but it causes frustration and resentment that help foster the kind of atmosphere in which extremist groups can thrive. A much better, and cheaper, way of defeating extremists than war on terrorism would be to give developing countries the possibility to trade out of poverty.

Trade has been shown to be the indispensable means for poverty reduction and growth. There also seems to be a close correlation between a country engaging in open trade and ultimately embracing democracy. With 40 percent of humanity living on less than $2 a day and approximately a billion living under military style dictatorships often engaged in civil war and genocide, we should care a lot. The most striking example of the benefits of a trade oriented economy versus a closed, self-sufficient one is the two Koreas. At the end of the Korean war in 1952 they were both extremely poor. And how North and South Korea have developed since then under their different systems is well known.

What will G20 do to craft a fairer world trade order? Most Westerners would like a fair global economic system. If, for instance, the issue of access to life-saving Aids drugs were put to a vote, the overwhelming majority would not support the position of Western pharmaceutical companies. The power of special interests is high – but will it still be if trade moves up the political agenda in G20? And once that has happened, will people in the West agree to anything that asks the poorest people in the world – the billions living on less than $2 a day – to pay the price? Will G20 leaders from developing countries manage to make their colleagues from the West realize that in order for the world economy to work properly, there need to be advantages for the poor as well? That’s the big question isn’t it ,and my hope is that they will succeed so that we can finally unlock the benefits of the world economy for all.

(Photo:www.flickr.com/photos/londonsummit/href=”http://www.flickr.com/photos/londonsummit)

Criminal syndicates are increasingly turning from smuggling drugs to human cargo, and governments and law-enforcement agencies are, despite huge efforts, not able to do much about it. Hefty fees of $4,000-$10,000 per person are being charged but many immigrants still die en route.

Scrapping EU & US agricultural subsidies would go a long way towards enabling the developing world to start trading themselves out of poverty. Something that would benefit the whole world.

In Europe, the most popular destinations are Scandinavia and Britain. But once there many immigrants fail to integrate into society not only in first but frequently even second and third generation. A clear indication that they really do not want to be here, but since they can’t make a living back home they have no choice. On top of that many first generation immigrants are uneducated so their financial situation doesn’t improve much, if at all. Can’t help thinking that all this is so unnecessary and the only ones benefiting are some vested interests and the gangsters making money smuggling them to the West.

So how can we enable illegal immigrants to support themselves in their home countries hence depriving people smugglers of their lucrative income? Aid doesn’t seem to do the trick, at least not so far. So why should more foreign aid suddenly be able to remedy the current situation?

Am a firm believer of replacing aid with trade by helping developing countries trade themselves out of poverty. And the swiftest and easiest way of doing so would be to enable them to sell their agricultural produce on the international market.

The EU spends almost two fifths of its entire budget (EU budget for 2010 around 139bn Euros) the Common Agricultural Program, CAP, and even pay European farmers to overproduce. Those products are then dumped at ultra low prises in developing countries, whose farmers are not able to produce at such low costs. Result; poor farmers become even poorer and developing countries even more dependent on imports to feed their population.

Scrapping CAP as well as US farm subsidies would hence go a long way towards improving the lives of poor people in developing countries and hence reduce people smugglers income. But chances of that happening are slim, unfortunately, since farmers are a strong lobby group in the US and out of 27 EU member countries only four are interested in gradually getting rid of CAP. Not surprising since politicians first priority is to get re-elected.

We also have to take into account the high costs of supporting immigrants that neither integrate not have any means of supporting themselves? Think of all the desperate people hiding in Calais hoping to get a ride underneath a truck to the UK. Not to mention racial riots in Europe, even in small towns in Sweden? Unless we want riots to become a permanent fixture, something has to change. Wouldn’t it be better to enable them to support themselves back home where they are happy? That way only the ones that really wanted to come to the West would emmigrate – and integrate.

All consumers in the world would benefit from abolition of EU & US agricultural subsidies since agricultural products would suddenly become much cheaper. Less immigrants would come to both Europe and the US since more of them would be able to support themselves at home. Wouldn’t that be a improvement to the current situation? Less Westerners become farmers anyway, so why don’t we press fast forward and make this world a better place for all, apart from people smugglers?

What’s the point in depriving developing countries of their ability to trade themselves out of poverty in order to preserve a profession that is in decline anyway? Just to get politicians re-elected? Wouldn’t it be better to take a more holistic view and find solutions that are beneficial to all, instead of just a few? We also have to improve the global trade regime that has been crafted over the years by the WTO to benefit not only multinationals in the North but also the poor in the South. But abolishing Western agricultural subsidies would make an excellent start.

(Photo: farmingmatters – Flickr)

Global trade contracted by about 12 percent in 2009 but has started to pick up, the head of the World Trade Organization (WTO) Pascal Lamy said. The WTO has revised its previous estimate of a contraction of about 10 percent in 2009 but declined to give a forecast for 2010.

Whether the pick-up in global trade is short term or sustainable is difficult to say.

“World trade has also been a casualty of this global economic crisis, contracting by about 12 percent in 2009,” Lamy said. He added that it’s a huge drop and the sharpest decline since the end of World War Two.

Asked about world trade in 2010, he declined to give any figure but said: “Certainly there is a pick-up. Whether this pick-up is short term or sustainable is difficult to say but we certainly are picking up.”

Lamy told a meeting organized by the European Policy Center think-tank that opening global trade offered a way out of the crisis and that it was “economically imperative” to conclude the Doha round of talks on a new global commerce pact.

So it seems global trade is picking up but even experts are not sure if it will continue to do so this year? What do you think? Will world trade pick-up this year? If so, how much do you forecast? Or is the rise we have seen so far this year just a temporary increase that will start declining again?

(Photo: Vita Vanaga Photo Xpress)